Tax laws are changing over the next few years. Some of those more significant changes have to do with eligible deductions for medical expenses. Independent physicians should be aware of the 2019 tax benefits from medical expenses, for themselves and for their patients.
The tax changes include an increase in the standard deduction as well as a lower threshold for medical expenses for those who do itemize. In the 2018 tax year, medical expenses that exceed 7.5 percent of a person’s gross income can be written off. However, with the 2019 tax year that number reverts back to 10 percent of gross income.
AARP reports that eligible medical expenses include:
- Out-of-pocket fees to doctors, dentists, chiropractors, psychiatrists, psychologists, podiatrists and other medical professionals that are not covered by Medicare or other health insurance
- Health insurance premiums — as long as they weren’t paid with pretax dollars, as most employer-based health benefits are. You can deduct Medicare Part B premiums and any premiums you pay for a Medigap policy, Medicare Advantage plan or a Part D Prescription drug plan.
- Premiums for long-term care insurance and payments to nursing homes and other long-term care facilities
- Inpatient alcohol and drug treatment programs
- Wheelchair ramps and other modifications you make to your home for medical reasons
- Transportation to and from doctor and other medical appointments — including taxi or bus fares, or out-of-pocket costs for using your personal car, including parking.
- Copays for prescription drugs
- Copays for physical or occupational therapists
- Payments for dentures, prescription eyeglasses or readers, hearing aids, crutches, wheelchairs or other durable medical equipment
- Payments for smoking-cessation programs and weight-loss programs related to a specific disease diagnosed by a doctor, including obesity
According to AARP, Medicare beneficiaries spend an average of $5,680 on medical expenses each year. The current threshold of 7.5 percent will help those patients as they tend to have lower incomes. In fact, AARP states that 49 percent of those taking advantage of the medical expense deductions have earnings of less than $50,000 per year.
In other tax-related news, the House Ways and Means Committee introduced a tax package on December 10, 2018, that “includes a five-year moratorium on the medical device tax; a two-year delay for the so-called Cadillac tax on high-cost employer plans, which won’t expire until the end of 2021; a two-year delay of the health insurance tax; and a full repeal of the tax on indoor tanning,” according to Modern Healthcare. However, that tax package is not expected to pass in the Senate.